Reaction of other countries - policy coordination, Business Law and Ethics

Reaction of Other Countries - Policy coordination

A final problem associated with the policy coordination is that countries not involved in the policy agreement may react in such a way as to offset the gains from such an initiative. In fact, countries cannot determine their optimal policies without determining how other countries will react. This complicates the policy process for deciding on which optimal policy combination to pursue, and may cause countries to act unilaterally i.e., uncoordinated.